UNITED BANCSHARES INC/OH (UBOH) stock intrinsic value fair value estimate & owner earnings analysis

United Bancshares operates a community bank, First Federal Bank, serving northwest Ohio and surrounding areas, earning a spread on loans funded largely by local customer deposits. Since a 2017 acquisition roughly doubled the branch footprint, the bank has grown steadily to just over $1.0 billion in assets and about $950 million in deposits, with a long history of profitability, share buybacks, and a growing dividend. We estimate owner earnings for a bank as net income per share -- loan and deposit growth is the bank's real form of reinvestment, and it is better captured in the scenarios below than forced into a capex-style deduction. Over the five years since the 2017 acquisition (2018 through 2022, a window that also spans both the ultra-low-rate years and the start of the 2022 rate-hiking cycle), earnings per share ranged from $2.51 to $4.16. We anchor on the median of that period, $3.46 per share, which is also the most recently reported figure. 2022 earnings were down about 15% from 2021's $4.07, as rising rates pushed up what the bank pays on deposits faster than what it earns on loans, and mortgage-banking income fell from its 2020-2021 highs. We carry that same rate of decline into the first year of our forecast rather than assuming an immediate rebound. From there, we assume the pressure gradually eases as the broader interest-rate cycle turns -- a widely-cited process already underway by late 2024 -- allowing the bank's margin to normalize and per-share earnings to resume mid-single-digit growth by around 2029, roughly matching its historical pace of loan and deposit growth. Beyond the ten-year forecast we assume the bank's core deposit franchise continues to fund a book of loans that renews itself indefinitely, sustaining a modest roughly 1% per year growth rate on those normalized earnings; this tail accounts for roughly two-thirds of the estimated value in every case, so the estimate rests heavily on that franchise remaining intact and funding costs not permanently re-rating higher. We see a base-case value of about $72 per share. In a harder scenario -- margin pressure runs deeper and longer, credit costs rise off their unusually benign recent levels, and no further acquisitions occur -- the value comes to about $47 per share. In a stronger scenario, where rates ease sooner and the bank's growth and credit performance stay excellent, the value reaches about $104 per share. Note that the bank's book value fell from about $119 million to about $83 million during 2022, almost entirely from unrealized mark-to-market losses on its investment securities as rates rose -- an accounting paper loss, not a cash loss, but one that would matter if it were ever forced to sell those securities at a loss, and we have weighted that risk into the bear case. One limitation worth noting plainly: our data reflects the fiscal 2022 annual report, and we do not have a more recent filing to confirm how the bank has performed since. We have found no indication of any operational trouble, and the shares appear to still trade actively. Given that gap, the margin-of-safety price of about $56 per share assumes a more current filing confirms the margin and credit picture; it is roughly a 22% discount to our base-case estimate, reflecting a moderately wide range of outcomes for a bank whose profitability is sensitive to the interest-rate cycle.